Sticking with his economically insane campaign promise to construct 500,000 new homes in 2013, Hollande Announces 20 Measures to Support Home Building.
Advocating a "confidence shock" to revive the building "against the Emergency Economic, social and environmental" the head of state has shown its desire to remove "all obstacles to construction", while there was about 340,000 starts of new homes in 2012, below the target of 500,000.
Housing Starts Insanity
I commented on this once before but it's worth a repeat now that Hollande is hell-bent on forcing his will on the market.
Reader Tim Wallace helps put the insanity into perspective. Wallace writes ...
Hello MishIndeed, we do know how this would end.
I was astounded to see that France wants 500,000 units of housing starts. According to the World Bank in 2011 France had a population of 65.5 million people. This compares to the USA population of 311.6 million from the same source. Therefore France is approximately 21% the size of the USA. For the USA to have an equivalent number of housing starts to population (the people who would get the units) we would need to have 2,380,952 starts!
We know how that would end.
The US is currently running about 890,000 housing starts annually, on a seasonally adjusted basis. And Hollande wants an equivalent 2,380,952 starts "for the public good".
US housing is distressed. However, France is in the midst of a bubble now burst, and it is beyond stupid to keep building anywhere in the face of falling demand.
"Confidence Shock Coming Right Up"
Before the election, people assured me Hollande could not possibly be foolish enough to actually follow through on his campaign promises. To them I say, never underestimate what a socialist fool (or any other kind of politician) might attempt to do.
Should Hollande actually succeed at getting developers to build 500,000 new homes even though developer Nexity predicts 280,000-300,000, I can guarantee you there will be a "confidence shock" because home prices will crash through the floor.
Mike "Mish" Shedlock